HYPOTHESES DEVELOPMENT

In the following, the relationships described from the research model are discussed theoretically and hypotheses derived with reference to them. The relationships between the different macro-and micro levels are analyzed and explained. This approach allows to integrate previous theoreticaal aspects from different studies and to substantiate the presented research model. Essential theoretical contributions have already been examined and processed in Chapter 2 with regard to literature review.

Figure 8 Antecedents-Behavior-Outcome (ABO) Framework as an Integrative Research Model of the Dissertation

Situational influence of the Perceived Dynamic Environment on Ambidextrous Leadership Behavior

Many articles on management theory begin with an introduction that companies are in a dynamic environment. And although this statement is used so often, it is still gaining in importance as we constantly find practical examples of how companies are affected by dynamic changes in their environment. The most recent example of the economic crisis in 2008 demonstrated how interdependent the economic markets are and how this dynamic led to global financial crises. In this context, it can be stated that many companies are perceiving an increasing dynamism in their markets due to changes in the economy, technology and society.

Jansen et al. (2006) characterizes the dynamics as an uncertainty factor that leaders and companies have to deal with. According to Schreyögg & Kliesch‐Eberl (2007), dynamic markets are defined by the fact that especially leaders are confronted with an increasing complexity of tasks.

Under this assumption, Keller & Weibler (2015) found in an empirical study that the situational effects of the environment in terms of complexity have an influence on leadership behavior and leaders adapt their behavior to environmental conditions. Importantly, these results indicate that leaders do not act completely independently of the environmental situation.

Consequently, the environment of a company is a major antecedent of a certain leadership behavior. Furthermore, the situation decides which behavior a leader determines, how this behavior is perceived by the employees and whether their reactions contribute to the goals of the company.

In this context, Bledow et al. (2009) state that a complex leadership approach is needed to cope with complex tasks such as innovation management. According to Rosing et al. (2011) there are basically two decisive types of leadership behavior in complex contexts. In this regard, open and closed leadership behavior are described. An open leadership behavior is characterized by the promotion of self-responsible task fulfilment, the creation of possibilities for independent thinking and acting, the openness for discussions as well as the ability of the team to work more creatively. In contrast, closed leadership behavior involves the realization of plans, the taking of corrective measures, the implementation of routines and the concentration on efficient work. Given this evidence, Jansen et al. (2009) described that it is difficult for many leaders to implement and define clear guidelines and routines in terms of the increasingly perceived market dynamics.

From this it can be postulated that the increasing market dynamics have a negative impact on the focus of closed leadership behavior. In contrast, Yang (2009) even found that this uncertainty creates opportunities for new exploration and therefore requires more open leadership behavior.

Keller & Weibler (2015) noted, that employees need more structure, especially in dynamic situations, and therefore a focus on open leadership behavior can be also problematic.

Consequently, a negative correlation between perceived market dynamics and open leadership behavior can also be concluded. According to Ferdig (2007), there is a need for an ambidextrous behavior that takes into account not only opened but also closed activities.

In this context, the empirical study by Weibler & Keller (2011) already examined a significant relationship between perceived dynamic environmental conditions and open and closed leadership behavior in terms of transformational and transactional leadership behavior.

As already analyzed in Chapter 2, ambidextrous leadership behavior offers the possibility of switching both open and closed leadership behavior depending on the situational context. This flexibility seems to be best suited in a dynamic or strongly changing situation. As Gibson &

Birkinshaw (2004) described it, the leader is in a position, to give employees space for creativity and at the same time to implement routines in the processes if necessary. Especially in dynamic environments, this balance can be seen as an immense competitive advantage, as it enables organization not only to focus on a certain leadership behavior, but also to make better use of resources through ambidextrous behavior. Based on the proceeding discussion, the following hypotheses can be deduced.

Hypothesis 1: The perceived market dynamics of the organization relates positively to fostering an ambidextrous combination of closing leadership behavior and opening leadership behavior.

Relationship between Ambidextrous Leadership Behavior & Ambidextrous Employee Behavior in an Organizational context

Numerous studies have shown that successful companies in dynamic environments indicate ambidextrous skills that can take on both explorative and exploitative tasks (Kauppila and Tempelaar 2016; Cao et al. 2010). However, in order to adapt to change, recent research on this issue shows that ambidexterity is not only necessary at the organizational and leadership level, but also at the team and employee levels (Mom et al., 2006; Keller & Weibler, 2015;

Alghamdi, 2018; Tuan, 2017; Zacher et al., 2016; etc.).

In this respect, Mom et al. (2006) concluded that employee ambidexterity has a positive impact on the performance of companies in dynamic contexts. To promote this ambidexterity in employee behavior, leadership is considered one of the most influential predictors of employee performance and organizational development (Zacher et al. 2016; Bledow et al.

2009). The ambidexterity theory of leadership, driven by the research of Zacher et al. (2016), proved that the innovation performance of employees is significantly affected by ambidextrous leadership behavior, since both opening and closing leadership behavior can be taken into account.

In this context, opening behaviors include measures that drive employee exploration behaviors, such as promoting alternative methods of task fulfillment. Closing leadership behavior concerns measures that facilitate the exploitation of ideas, such as the definition of routines and the monitoring of the achievement of objectives, as well as ensuring compliance with the rulers (Zacher & Wilden, 2014). In the study by Tuan (2017), it was empirically proven that ambidextrous leadership also has a positive effect on the ability of organizations to change, by emphasizing a balance between these opening and closing leadership behavior in the change process. According to a recent study by Alghamdi (2018), an ambidextrous leadership style that combines opening and closing leadership behaviors promotes explorative employee behavior and exploitative employee behavior and is effective in promoting employee flexibility and task performance.

Although these results may seem very promising, there are only a few studies in the scientific discourse that focus on the ambidextrous leadership style and employee behavior in the context of organizational agility. This seems surprising, because according to a meta-analysis by O’Reilly & Tushman (2008) found that the agility of companies is determined and influenced in particular by employees and thus by leadership behavior. In this context, an excessive focus on one of the two behaviors can lead to companies and employees not being able to adapt flexibly to a future challenge, especially from an organizational point of view.

March (1991) argues, that an entirely focus on both exploitation or exploration would lead to a

"success trap" in terms of competitiveness, as both behaviors are inevitably opposed to each other.

In this respect, the work of O’Reilly & Tushman (2008) has shown that both exploratory and exploitative behavior can also be used within the agility framework. Organizations who can be both explorative and exploitative in a ambidextrous way increase their performance and can achieve goals through this behavior.

For this reason, I predict that an ambidextrous leadership style could stimulate a ambidextrous behavior of employees in different ways. First, the opening of leadership behavior could trigger the subordinates motivation to explore, encourage subordinates to independently seek alternative flexible approaches and agile solutions to customer problems (Rosing et al., 2011).

Secondly, closing leadership behavior supports the maximum use of existing knowledge, which serves to increase reliability and efficiency (Rosing et al., 2011). Here leaders can change the form of incentives and/or take on more demanding service tasks in order to improve the efficiency and performance of their work (Tuan, 2017). Based on the proceeding discussion, the following hypotheses can be postulated.

Hypothesis 2: Ambidextrous leadership in combination of opening and closing leadership behavior relates positive to fostering an ambidextrous employee behavior in terms of a combination of explorative and exploitative employee behavior.

The Effects of Ambidextrous Employee Behavior on the Organizational Agility

As described above, the ability to adapt to changing circumstances is central to the success of many businesses. Hasebrook et al. (2019) describe this ability to deal with environmental complexities as organizational agility. As noted, two forms of organizational agility are considered in this study. On the one hand the market capitalizing agility emphasizes an organization's ability to find appropriate actions. This agility includes not only selection and processing of information to identify and anticipate problems, but also the ability to continuously monitor and rapidly improve the product/service offering to meet customer needs (Dove 2001). On the other hand, the operational adaptability shows the ability of the company to react quickly to changes in demand in its internal business processes (Sambamurthy et al.

2003). This agility focuses more on the flexibility of structures and processes to react quickly to changes. It is primarily focused on operational activities and is therefore reactive (Jansen et al. 2006).

Against this background, a number of questions regarding the agility of organizations remain to be addressed. What determines organizational agility and what factors influence it?

In this respect, O'Reilly & Tushman (2003) describe ambidexterity as a dynamic ability that has an impact on business performance. Surprisingly, it is claimed that ambidexterity is a dynamic ability, but not whether it affects agility.

In this context, Alghamdi (2018) stated in his current study that individual agility in daily business life is made possible by ambidextrous employee behavior. It has also been found that ambidextrous practices enable companies to improve their ability to address organizational problems, improve their innovation performance and become more cost effective (Bledow et al. 2009). Given this findings, the behavior of employees and leaders plays a key role in enabling this organizational performance (Zacher et al., 2016).

Therefore, it can be assumed that a market capitalized agility requires an explorative behavior of the employees and an operational agility rather requires an exploitative behavior. It can be stated that agility at the organizational level can be positively influenced by ambidextrous behavior of employees. However, since none of the known studies analyzed ambidextrous employee behavior in relation to organizational agility, the following hypothesis can be derived in this respect.

Hypothesis 3: Ambidextrous employee behavior combined with explorative and exploitative behavior will positively influence organizational agility.

The Complementary Relationship of Perceived Market Dynamic & Organizational Agility

As illustrated in figure 8, this research conceptualizes the complementarity of perceived market dynamism and organizational agility. The dynamic business environment, driven primarily by the megatrends of digitalization, globalization, and general market deregulation, requires companies to keep pace and implement reforms to meet the changing environment. In this context, Nijssen & Paauwe (2012) describe that established traditional industrial companies in particular are often attacked by younger companies due to the innovative technology in their business model and are therefore subject to considerable dynamic change. Given this evidence, Bruhn & Hadwich (2017) describe that established players often find it difficult to adapt to competitive, dynamic environments and simply react too late. A recently published study by the Boston Consulting Group proved that around 60% of 40 family businesses with sales of up to €7 billion invest only 1.5% of their sales in digitization. Although companies recognize the necessity of digital change, they are often unable to implement it. This lack of flexibility and lethargy offers technology-driven companies the opportunity to replace parts of the value chain - mostly within the framework of new digital, service-based business models.

Against this background, researchers and practitioners believe that the concept of organizational agility is increasingly becoming a success factor for companies, ensuring survival in a turbulent and rapidly changing environment (Ganguly et al. 2009). In this context, several researchers have identified several factors that companies can achieve through organizational agility. For example, companies can react better to dynamic market changes (Aravind Raj et al. 2013), generate competitive advantages (Ganguly et al. 2009) and deliver innovative products to customers promptly and cost-effectively (Swafford et al. 2006).

Therefore, an increasingly perceived dynamism in the market is a major antecedent and requirement for agility capability (Bruhn & Hadwich (2017). Because of this, many organizations have begun to build skills to respond quickly to the troubled markets (Nijssen &

Paauwe, 2012). According to Lee et al. (2015), describe the need for organizational agility in order to survive in dynamic times. Consequently, it can assume that the perceived environmental dynamics predict an increasing need for agility.

Hypothesis 4: The perceived market dynamics of an organization relates complementary to organizational agility, insofar that the perceived market dynamics predict organizational agility.

In summary, hypotheses 1 to 4 are posited, figure 9 illustrates the postulated relationship between perceived market dynamic, ambidextrous leadership and organizational agility.

Figure 9 Conceptual Research Model & Hypotheses

Antecedents Outcome